In July 2021, the International Coffee Organization (ICO) composite indicator of coffee prices reached 152.24 US cents per pound, marking a 43.8 per cent increase since October 2020. This is the highest monthly average since 162.17 US cents per pound was recorded in November 2014.
The July 2021 ICO Coffee Market Report also found that prices for the Arabica variety of coffee reached peak levels not seen since November 2014. The report voiced growing concerns about the current and future availability of many coffees besides Arabica, linked to the severe frost in Brazil.
With Brazil being the world’s largest coffee producing region, market volatilely has consequently increased. When frost hit the Brazilian coffee belt on 20 July, daily prices skyrocketed by 25.4 per cent for one week, from 165.64 US cents per pound on 20 July to 207.8 Us cents per pound on 26 July.
Prices for all group indicators increased in June 2021, all reaching their highest levels in several years.
Colombian milds reached 218.66 US cents per pound in July 2021, rising 42.6 per cent from July 2020. This is the highest monthly average for Colombian milds since October 2014.
Prices for Other Milds increased by 6.2 per cent to 204.29 US cents per pound in July 2021, as compared to 192.45 US cents per pound in June 2021. This is also the highest monthly average since November 2014.
The price for Brazilian Naturals rose to 160.62 US cents per pound in July 2021, the highest monthly average since January 2015.
The Robusta indicator price increased by 11.2 per cent from 84.85 US cents per pound in June 2021 to 94.37 US cents per pound in July 2021. This price is the highest monthly average recorded for Robusta coffee since October 2017.
Export of all forms of coffee across all exporting countries reached 11.2 million 60-kilogram bags in June 2021, increasing by 4.1 per cent as compared to the 10.8 million bags recorded in June 2020. The total level of exports recorded in June 2021 mirrors volume levels pre COVID-19 pandemic.
The first 10 months of the 2020/21 coffee year has seen an upward trend of coffee prices, which, according to the ICO, confirms a net recovery from the low-price levels that has dominated the world coffee market since the 2017/2018 coffee year.
The report finds that this price-performance has been driven by brighter demand prospects, as vaccination programs are rolled out and pandemic-related restrictions ease in the majority of consuming markets. The report says this is enabling a progressive return to normal economic activity.
The projection for total production in the 2021/21 coffee year remains unchanged at 169.90 million bags, representing a 0.3 per cent increase from the 168.94 million bags harvested in the 2019/20 coffee year.
World coffee consumption, however, is predicted to increase by 1.9 per cent from 164.43 million bags for the coffee year 2019/20, to 167.58 million bags in the 2020/21 coffee year. This is still 0.8 per cent below pre-COVID levels.
“However, with substantial reduction of output from Brazil and many other origins affected by climate-related shocks, combined with increasing demand, the supply/demand ratio is expected to reverse from coffee year 2021/22 onward,” ICO says.
To read the full report, click here.